Friday, August 28, 2015

On The Warped Logic And Dogma Adherance of Willis Hart

This post concerns another commentary by the Libertarian blogger Willis Hart in which he calls out Democratic presidential candidate Bernie Sanders. This time for his "dogma" re a non-acceptance of the Libertarian argument against increasing the minimum wage.

Willis Hart: On the Warped Logic of Bernie Sanders... Alright, let's see if I've gotten this straight. He embraces the notion that by taxing carbon you get less carbon but he won't even entertain the notion that by making it much more expensive to employ people (through copious mandates) you get less employment... Nah, no dogma goin' on here. (8/25/2015 AT 9:49pm)

What's warped here is that Willis thinks the "if you tax something you get less of it argument" applies equally to the argument that says carbon can be reduced by taxing it to the Libertarian argument that says the minimum wage reduces employment.

This is an easy one to knock down because employers are already employing as few people as possible in order to make a profit. Or, that is their continual goal... as less people doing the same work means more profit. Does Willis think that with no minimum wage employers will hire people they don't need? What, out of charity?

Businesses exist to make money. They cannot make money if the work that they need to have done to make that money can't get done due to a lack of workers. Does Willis think they're going to fire people out of spite?

Unless the profit margin was very low and the wage increase eats up all the profit... and if that is the case... that business probably wasn't working with a good model to begin with.

I mean, if you look at the cost of labor as a percentage of the cost of a finished good or service, that percentage is usually quite low. For most industry sectors, labor represents less than 3 percent of the cost of the finished good or service (according to BizStats, a website that touts itself as "the home of free, accurate business statistics". Specifically the page "Cost of Labor: Cost of Goods Sold").

And, according to the US Department of Labor, it is a myth that "increasing the minimum wage will cause people to lose their jobs".

In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, "In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front." (Minimum Wage Mythbusters).

Taxing carbon, on the other hand, WILL cause companies to look for ways to reduce their output. Reducing the number of workers they need... that's something they're ALREADY doing. They're not currently looking for ways to reduce their carbon output because there is no cost to them spew as much carbon as they want (where as it would cost them to reduce their carbon).

A tax on carbon incentivize them to reduce their output. An increase in the minimum wage might further incentivize employers to try and reduce their workforce, however (1) that is something they are already doing anyway, and (2) paying workers more will stimulate the economy, thus producing more demand... so these businesses will likely need more workers to meet the increased demand.

Which is exactly what the US Department of Labor says. Raising the minimum wage will have an overall POSITIVE effect.

So, warped logic? Dogma? Nope to both. The only warped logic being adhered to is the warped logic that forms the basis of Libertarian ideology. The logic of Willis Hart, in other words. Bernie Sanders is NOT a Libertarian, and therefore rejects the BS that makes up Libertarian dogma. A person who has the facts on their side does not need to resort to dogma. Something that is clearly not the case with the Hartster.